Charges filed against Chevron execs in Brazilian oil leak

Bloomberg/Los Angeles Times, 03/22/2012

Seventeen Chevron Corp. and Transocean Ltd. executives were charged with environmental crimes in connection with an oil leak off Rio de Janeiro’s coast, and prosecutors are calling for damage payments and prison sentences.

The companies applied excessive pressure when drilling at Chevron’s Frade field, used faulty equipment and failed to meet requirements to avoid and counter spills, the federal prosecutor’s office said. George Buck, head of Chevron in Brazil, and other executives were also charged Wednesday with obstructing an investigation. Prosecutors asked for prison sentences of as long as 31 years.

The 3,000-barrel slick at Chevron’s $3.6-billion Frade project in November occurred at a time Brazil was increasing scrutiny of deep-water drilling after the 2010 Macondo oil spill in the Gulf of Mexico. Chevron was “careless” when drilling the well, Rio de Janeiro State Environment Secretary Carlos Minc said.

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Brazil tries to lay down the law with Chevron

Mayara Vilas Boas – Bloomberg, 03/21/2012

An overreaction, or the response of a government that has learned from the mistakes of others?

Either way, Brazil has been aggressive about a 110,000-gallon oil spill last November, as well as a current leak, from a deepwater drilling rig 230 miles off the coast of Rio de Janeiro. The rig is controlled by oil giant Chevron Corp. and managed with its partner, Transocean Ltd. According to the head of the federal police’s environmental affairs division, Chevron and Transocean insisted on drilling at an excessive pressure.

Following the spill, Brazilian authorities suspended Chevron’s drilling activities, denied it access to new offshore fields and seized the passports of 17 company executives. “There is no doubt that the departure of these individuals from our country, at this time, would pose a serious risk to the (spill) investigation, and the possible enforcement of a criminal law,” said Judge Vlamir Magalhaes, who signed the seizure order.

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Exclusive: Chevron to face criminal charges over Brazil spill

Jeb Blount, Joshua Schneyer – Reuters, 01/26/2012

A Brazilian prosecutor plans to file criminal charges against Chevron Corp and some of its local managers within weeks, adding the threat of prison sentences to an $11 billion civil lawsuit as punishment for a November offshore oil spill.

The filing in federal court in Campos, Brazil, will likely include a request for criminal indictment of George Buck, chief executive of Chevron’s Brazil unit, as well as other staff, three Brazilian government officials involved in the case told Reuters.

Transocean Ltd, whose rig was used in the operation, and some of its employees in Brazil are also expected to be charged, according to the officials, who requested anonymity because the case has not been presented to a judge. It is up to a judge to determine whether to accept the charges and proceed with indictments.

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Oil, water and trouble

The Economist, 12/31/20111

The flow of oil from cracks in the seabed off the coast of Rio de Janeiro has long since slowed to a mere trickle. Not so the retribution against Chevron, an American oil company that was drilling in the Frade oilfield on November 7th when a sudden rise in pressure caused a leak.

Brazil’s environment agency, IBAMA, has fined the company 50m reais ($28m) for the leak. On December 23rd it levied a further 10m reais for poor contingency planning. The National Petroleum Agency (ANP), the industry regulator, has closed one of Chevron’s Frade wells and suspended the firm’s drilling rights. The Rio de Janeiro state government is suing for 150m reais. A federal prosecutor in Campos, a city in the north of the state, is demanding 20 billion reais in punitive damages and seeking an injunction to halt all operations in Brazil by both Chevron and Transocean, the subcontractor drilling for it in Frade. Federal police, meanwhile, want to bring criminal charges against bosses of both companies.

After the 4.9m-barrel spill from the Macondo well in the Gulf of Mexico in 2010, oil regulators around the world are in no mood for leniency. But the blitz against Chevron, for a leak of no more than 3,000 barrels, makes some industry-watchers wonder whether Brazil wants foreign oil companies at all. “The reactions are out of proportion with the size of the leak,” says José Goldemberg, an energy and environment specialist at the University of São Paulo. Petrobras, Brazil’s state-controlled oil giant, holds a minority stake in Frade, but none of the lawsuits or fines names it as a respondent. “I don’t think there would have been the same enthusiasm for big fines if Petrobras had been drilling.”

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Chevron in Brazil: one messy spill

Samantha Pearson – Financial Times, 12/16/2011

Financial Times

Compare and contrast the following oil spills:

The Gulf of Mexico disaster last year released 4.9bn barrels of oil into  the sea, killed 11 people, and caused extensive damage to the local  coastline, and fishing and tourism industries. BP, the operator of the  well, booked more than $40bn in losses as a result.

Last month, less than 3,000 barrels of oil spilled from Chevron’s Frade field off the coast of Rio  de Janeiro, killing no one and causing no visible impact to the local  coastline. Chevron is being sued, jointly with rig operator  Transocean, for R$20bn ($10.6bn) and both companies face being kicked out  of Brazil.

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Brazilian prosecutors seeking $10B in damages from oil company Chevron for offshore leak

AP/The Washington Post, 12/14/2011

Brazilian federal prosecutors said Wednesday they are seeking $10.6 billion in damages from U.S.-based Chevron Corp. because of environmental harm caused by an offshore oil leak.

The prosecutors are also asking a judge to order Chevron and Transocean Ltd., the drilling contractor for the well where the leak occurred in November, to halt all activities in Brazilian territory for an indefinite period.

“During an investigation, the attorney general’s office found that Chevron and Transocean were not capable of controlling the damage caused by the spill of nearly 3,000 barrels of oil, proof of a lack of environmental planning and management by the companies,” the statement read.

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Chevron out of Brazil if it fails to comply, minister says

EFE, 12/05/2011

U.S.-based Chevron Corp. will have to leave Brazil if it fails to comply with the agreement it reached to deal with the damage caused by an oil spill last month off the coast of Rio de Janeiro state, Energy and Mines Minister Edison Lobao said.

“The company has already been given a very strong penalty for what it did and it has been suspended from engaging in new drilling in Brazil, even if it is the second-largest oil company in the world,” Lobao told reporters in Teresina, the capital of the northeastern state of Piaui.

Chevron must pay a fine of 50 million reais (about $28 million) levied by officials and took responsibility for the environmental damage caused by the spill, whose extent has still not been determined, the energy minister said.

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